1. Bellwork
Refer to P What does the cartoon imply about the impact of taxes on people?

2. Bellwork
List all the types of taxes you can think of.
(at least 5)

3. Income Tax – tax on your salary
Sales – tax on purchases
Property – tax on land and property (based on the value of your home and amount of land)
Social Security – 6.2% tax on earnings that goes to pay for SS benefits when you retire
Corporate income tax – tax on a corporation; the more profitable a company is, the more they pay

4. Taxes
Chapter 9

6. Objectives
Differentiate between the three types of taxes: Proportional, Progressive, Regressive
Recognize the impact of taxes on incentive.
Know the taxes that are collected from citizens in order to generate revenue for the government.

7. Objectives
Know the main source of revenue for each level of government.

8. What makes taxes effective?
Equity: Taxes should be impartial and just.
Simplicity - Tax laws should be written so that both taxpayers and tax collectors can understand them
Efficiency - Should be easy to administer and reasonably successful at generating revenue

9. Bellwork
What is the purpose of a tax deduction?

10. Two Principles of taxation
1. Benefit Principle - Those who benefit from government goods and services should pay in proportion to the amount of benefits they receive.
Example: Gas tax - the more you drive the more you pay
Limitations - Those who receive government services may be the ones who can least afford to pay for them
Benefits are sometimes hard to measure

11. Two Principles of taxation
2. Ability-to-pay principle - People should be taxed according to their ability to pay, regardless of the benefits they receive.
Example: Individual income tax: Requires people with higher incomes to pay more than those who earn less

12. Three types of taxes
1. Proportional - same percentage rate of taxation on everyone, regardless of income.
Example: Medicare - a federal health-care program available to all senior citizens, regardless of income. This tax is 1.45% of income.

13. Bellwork
What are the three types of taxes that the Federal government takes out of your paycheck?

14. Three types of taxes 2017 Tax Bracket Single
2. Progressive - Imposes a higher rate of taxation on higher incomes than on lower ones
Example: Individual income tax
2017 Tax Bracket
Single
10% Bracket
$0 - $9,325
15% Bracket
$9,325-$37,950
25% Bracket
$37,950-$91,900
28% Bracket
$91,900-$191,650
33% Bracket
$191,650-$416,700
35% Bracket
$416,700-$418,400
39.6%
Over $418,400

15. Tax Return
An annual report to the Internal Revenue Service (IRS) summarizing total income, deductions, and taxes withheld.
This is filed by April 15th and any difference is settled at that time.
Deductions Examples:
Education
Children and Day Care
Interest on your mortgage
Charitable Giving
401(k) Retirement savings

16. Deduction Example Total Income: $100,000
Deductions: 1 Child $3,200 = $96,800
Interest on Mortgage $2,000 = $94,800
Tithe $10,000 = $84,800
Salvation Army $50 = $84,750
Total Taxable Income: $84,750

19. Percentages of Federal Personal Income Tax Paid
Source: Internal Revenue Service
Income Earners % of All Taxes Paid
Top 1% %
Top 5% %
Top 10% %
Top 25% %
Top 50% %
Bottom 50% %

21. Three types of taxes
3. Regressive - Imposes a higher tax on low incomes than on high ones. Example: sales tax - because it is a higher percentage of a person’s income when they don’t make much.

22. Bellwork
What is the difference between a proportional tax and a progressive tax?

23. Tax Evaluation Type of Tax Definition Equity Simplicity Efficiency
Ability to Pay or Benefit Principle
Proportional,
Progressive,
Or Regressive
Federal Income Tax
Sales Tax
Property Tax
Social Security
Corporate Income Tax

24. The Federal Tax System
IRS (Internal Revenue Service) - branch of the U.S. Treasury Department in charge of collecting taxes today

25. Sources of Federal Government Revenues
Individual Income Taxes - the federal tax on people’s earnings
Usually paid through payroll withholding, a system that requires an employer to automatically deduct income taxes from a worker’s paycheck and send them directly to the IRS

26. Sources of Federal Government Revenues
FICA Taxes (Federal Insurance Contributions Act) which is to pay for Social Security and Medicare
Social Security - 6.2% of wages and salaries up to $127,200. Above that taxes are not collected so someone making $127,200 pays the same as someone making $1,000,000
Medicare: 1.45% flat rate

28. How much do you really make?
Annual Gross Income: $30,000 (2,500/mth)
Federal Income Tax: 4,053.75
Social Security (6.2%): 1,860
Medicare (1.45%): 435
TOTAL ANNUAL TAXES: $6,348.75
Annual Net Income: $23, (1,970.94/mth)

29. Deductions Education Mortgage Interest Childcare Children
Charitable Donations

30. Sources of State Government Revenue
Intergovernmental Revenue - funds collected by one level of government that are distributed to another
Sales Tax – tax on purchases
State Income Taxes – tax on income

32. Sources of Local Revenue
Intergovernmental Revenues
Property Tax - a tax on tangible and intangible possessions such as real estate, building, furniture, farm animals, stocks, bonds, and bank accounts
Local Individual Income Tax

33. What Tax Am I?

34. Give an example of each of the following types of taxes:
Bellwork
Give an example of each of the following types of taxes:
Proportional
Progressive
Regressive

35. Accountable Talk Speaking Prompts:
I would like to add on…..
I agree/disagree because
Why do you say that?
What I’m hearing you say is
Where’s your evidence for that?
Can you clarify your thinking for me:

36. Bellwork
What is your opinion of the income tax? (Do you think it is fair already? Do you think the wealthy should have to pay even higher percentages? Do you think the wealthy should have to pay lower percentages than they currently do?)

37. Objective
Complete a 1040EZ tax form.

38. Formative Assessment - Taxes
1. What is a progressive tax? Give an example.
2. Is the Income tax based on the principle of ability-to-pay or benefit?
3. What two taxes are included under FICA?
4. Name two deductions you can take to decrease your taxable income?
5. What is the number one way federal, state and local governments make money?

39. Bellwork
What are 5 things the government spends our tax dollars on?

40. Objective
Students will know how each level of government spends our tax dollars.

41. Assessing Questions
1) What are the largest expenses of the federal government?
2)What has contributed to our current debt situation?
3) What are some possible solutions to pay down our debt?

42. Government Spending
Chapter 10

43. Bellwork
What is the difference between mandatory and discretionary spending?

44. Exit Ticket
Do you think government revenues are usually larger than expenditures or do you think government expenditures are greater then revenues?
What makes you think this?

45. Government Expenditures
Goods and services – tanks, planes, office buildings, land for parks, capital goods for schools
Transfer payments – payment for which the government receives neither goods nor services in return (Example: Social Security, welfare)

46. Groups that are favored with Transfer Payment?
“Senior Citizens”
Social Security
Medicare
Low Income Families
Aid to Dependent Children
Medicaid
Food Stamps
Unemployed Workers
Unemployment Insurance Payments

47. Government Spending Mandatory Spending Discretionary Spending
Spending authorized by law that continues without the need for annual approval of Congress.
Social Security
Medicare
Welfare
Food Stamps
Unemployment
Spending that must be approved by Congress on an annual basis.
Defense
Education
Transportation

48. 1. List a transfer payment of the government.
2. List two goods or services the government provides.
3. List an organization/business run by the Public Sector and an organization/business run by the Private Sector
4. Give an example of mandatory spending and an example of discretionary spending.
5. List the #1 expense of the Federal, State, and Local Governments.

49. Federal Government Expenditures
Social Security
Medicare/Medicaid
National Defense

51. State Government Expenditures
Some states have a balanced budget amendment
Expenditures:
Intergovernmental expenditures
Public Welfare
Insurance Trust and Retirement for state employees
Higher Education

52. Local Government Expenditures
Elementary and Secondary Education
Utilities
Public Health and Safety

53. Government
Revenue
Expenditures
Federal
State
Local

54. Government
Revenue
Expenditures
Federal
Income Tax
Social Security
State
Intergovernmental Revenue
Intergovernmental Expenditures
Local
Elementary and Secondary Education

55. Revenue – Pink
Expenditures – Blue
Place the revenue and expenditures on the appropriate map, either Federal, State, or Local

57. Objectives:
Define and describe the federal budget deficit and differentiate that from the national debt.
Introduction to the reality of the national debt.

58. Federal Budget
Annual plan outlining proposed revenues and expenditures for the coming year.
Fiscal year (When the budget begins): Oct. 1 – Sept. 30
Federal Budget deficit – an excess of expenditures (spending) over revenues (taxes)
Federal Budget surplus – expenditures (spending) are less than revenues (taxes)

62. 1 Pallet = $100 Million

66. The National Debt
When the government runs a deficit, it must finance the revenue shortage by borrowing.
They borrow by selling U.S. Treasury notes to the public.
If you add up all the outstanding debt obligations, you have the NATIONAL DEBT! – the total amount borrowed from investors to finance the government’s deficit spending.

67. Difference between a budget deficit and the national debt.
Budget deficit – when the government spends more in one year than it collects in revenue
National debt – total of all the unpaid deficits incurred by the federal government

68. Deficit vs. Debt Personal Budget:
2010 – Income 40,000; Expenditures 45,000
$5,000 deficit
2011 – Income 45,000; Expenditures 48,000
$3,000 deficit
2012 – Income 50,000; Expenditures 57,000
$7,000 deficit
TOTAL DEBT ???????????????????

69. Bellwork
Would you rather pay down the debt by raising taxes or cutting spending? Why?

70. What does One TRILLION dollars look like?

71. A packet of one hundred $100 bills is less than ½” thick and contains $10, Fits in your pocket easily.

72. Believe it or not, this is $1 million dollars (100 packets of $10,000)
Believe it or not, this is $1 million dollars (100 packets of $10,000). You could put it in a grocery bag and walk around with it.

73. While a measly $1 million looked a little unimpressive, $100 million is a little more respectable. It fits neatly on a standard pallet……

74. $1 Billion dollars….now we are getting somewhere……

75. Now the number we have been hearing so much about
Now the number we have been hearing so much about. What is a trillion dollars? Well, it’s a million million. It’s a thousand billion. It’s a one followed by 12 zeros.

76. 16 Trillion

77. National Debt Clock

78. Balancing the Budget How can we ever balance the budget? Cut Spending
Raise Taxes

79. Your Mission……………
To pay down the national debt over time by making decisions on tax increases and/or government spending decreases
Type “The New York Times Budget Puzzle” in the search field
After discussing an option with your group, click on the choices you would like to make

80. Directions
1. Discuss your tax increases and spending decreases with your group.
2. Everyone in the group should click on the same budget items.
3. When you have solved the budget deficit (all your blue squares are filled in), complete the questions pertaining to the activity.

81. Exit Ticket
How do you think the National Debt will affect you in the future? How?

82. Group Expectations/Roles
EACH student should participate in the discussion of decisions to pay off the debt.
EACH student should fill out their “Budget Puzzle” (Each person in your group should have the exact same answers)
ONE writer should be chosen to answer the questions as you go through the simulation.

83. Bellwork
How does the government finance a revenue shortage?
Turn In

84. Bellwork
What is the difference between a Federal budget deficit and the National Debt?

85. Bellwork
How will the national debt affect you in the future? Are you concerned about it?

86. Objective
Students will review and be prepared for a summative assessment on taxes, government spending, and the national debt.

87. 1. Will the national debt cause the US to go bankrupt?
2. Are the interest payments on the dept important?
3. What about paying off the national debt by increasing taxes?
4. Does running deficits today, and adding to the national debt, put a burden on future generations?
5. Would a law or a Constitutional amendment requiring a balanced budget be a good idea?
How does the US national debt compare to that of other countries?
7. Does the national debt hurt poor people more than wealthier people?

88. Why Growth Matters More than Debt
1) Who are the top 5 owners of U.S. debt?
2) Where do the Chinese and Japanese get the U.S. dollars that they use to buy U.S. Debt?
3) What does the author mean when he says “we really do ‘try’ to pay them back?”
4) Why do Chinese and Japanese debt holders keep buying U.S. debt rather than holding onto dollars?
5) How do we maintain China and Japan’s desire for low interest Treasury securities?
6) Define “interest bite.” What three factors make the interest bite grow or shrink?
7) Why do other countries think we will continue to be able to pay back our debts? Should we just run up the debt as high as we want to as long as interest rates are low? Why or why not?